<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
GENERAL NUTRITION COMPANIES, INC.
---------------------------------
(Exact name of issuer as specified in its charter)
Delaware 04-3056351
-------- ----------
State of Incorporation (IRS Employer Identification Number)
921 Penn Avenue, Pittsburgh, Pennsylvania 15222 (412) 288-4600
--------------------------------------------------------------
(Address and telephone number of principal executive offices)
GENERAL NUTRITION COMPANIES, INC.
1996 Management and Director Stock Option Plan
1996 Management and Director Stock Purchase Plan
Stock Option Agreement
----------------------
(Full Titles of the Plans)
James M. Sander, Esquire
Vice President - Law, Chief Legal Officer & Secretary
921 Penn Avenue
Pittsburgh, PA 15222
(412) 288-4619
--------------
(Name, Address and telephone number of agent for service)
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered (1) Per Share Price Fee (2)
- ---------- -------------- ---------- ------------- -------
<S> <C> <C> <C> <C>
Common Stock, 2,225,000 15.50 $ 34,487,500 $10,451
par value $.01 625,000 18.60 11,625,000 3,523
per share 50,000 16.875 843,750 256
2,100,000 17.75 37,275,000 11,295
535,028 12.48 6,677,450 2,024
464,972 17.75 8,253,253 2,501
125,000 16.875 2,109,375 639
---------- ------------ ---------
6,125,000 $101,271,328 $30,689
</TABLE>
(1) Also registered hereunder are such additional number of shares of
common stock, presently indeterminable, as may be necessary to satisfy
the antidilution provisions of the Plans and option agreements to
which this Registration Statement relates.
(2) The registration fee has been calculated with respect to 2,564,972 of
the shares registered on the basis of the average of the high and low
sale price ($17.75) on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), on February 3, 1997; and with
respect to the remaining 3,560,028 shares on the basis of the offering
price thereof under the foregoing employee benefit plans and stock
option.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference the documents listed in
(a) through (c) below. In addition, all documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (prior to the filing of a Post-Effective Amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold) shall be deemed to be incorporated by
reference in this Registration Statement and to be a part thereof from the date
of filing of such documents.
(a) The Company's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 or the latest Prospectus
contained in the Company's Registration Statement on Form S-3 or filed pursuant
to the Rule 424(b) under the Securities Act of 1933, which contains audited
financial statements for the Company's latest fiscal year for which such
statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by the
annual report, the Prospectus, or the effective Registration Statement referred
to in (a) above.
(c) The description of the Company's Common Stock which is contained
in the Registration Statement filed by the Company under the Securities
Exchange Act of 1934, including any amendment or report filed for the purpose
of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES
Inapplicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The consolidated financial statements incorporated in this
registration statement by reference from the Company's Annual Report on Form
10-K for the year ended February 3, 1996 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference and has been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
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With respect to the unaudited interim financial information for the
Twelve Weeks Ended April 27, 1996 and April 29, 1995, Twelve Weeks Ended July
20, 1996 and July 22, 1995, and the Twelve Weeks Ended October 12, 1996 and
October 14, 1995, which are incorporated herein by reference, Deloitte & Touche
LLP have applied limited procedures in accordance with professional standards
for a review of such information. However, as stated in their reports included
in the Company's Quarterly Reports on Form 10-Q for the quarters ended April
27, 1996, July 20, 1996 and October 12, 1996 and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their reports on
such information should be restricted in light of the limited nature of the
review procedure applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports
are not "reports" or a "part" of the registration statement prepared or
certified by an accountant within the meaning of sections 7 and 11 of the Act.
The validity of the authorization issuance of the Common Stock offered
hereby will be passed upon for the Company by James M. Sander, its Vice
President-Law, Chief Legal Officer and Secretary.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Certificate of Incorporation of the Company
provides as follows:
No director shall be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
notwithstanding any provisions of law imposing such liability; provided
however, that, to the extent provided by applicable law, this provision shall
not eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of Delaware, or (iv) of any transaction from which the director derived an
improper personal benefit.
Section 145 of the General Corporation Law of the State of Delaware
permits the indemnification and insurance of the corporation's directors and
officers under certain circumstances.
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Article 10 of the By-laws of the Company provides as follows:
ARTICLE 10
INDEMNIFICATION
SECTION 10.1 THIRD PARTY ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 10.2 DERIVATIVE ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
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SECTION 10.3 EXPENSES. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
10.1 and 10.2, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 10.4 AUTHORIZATION. Any indemnification under Sections 10.1
and 10.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in Sections 10.1 and
10.2. Such determination shall be made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
SECTION 10.5 ADVANCE PAYMENT OF EXPENSES. Expenses incurred by an
officer or director in defending a civil or criminal action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of such officer or
director to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation as authorized in this Article
10. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
SECTION 10.6 NON-EXCLUSIVENESS. The indemnification provided by this
Article 10 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 10.7 INSURANCE. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted
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against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 10.
SECTION 10.8 CONSTITUENT CORPORATIONS. The Corporation shall have
power to indemnify any person who is or was a director, officer, employee or
agent of a constituent corporation absorbed in a consolidation or merger with
this Corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, in the same manner as
hereinabove provided for any person who is or was a director, officer, employee
or agent of the Corporation, or is or was servicing at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
SECTION 10.9 ADDITIONAL INDEMNIFICATION. In addition to the foregoing
provisions of this Article 10, the Corporation shall have the power, to the
full extent provided by law, to indemnify any person for any act or omission of
such person against all loss, cost, damage and expense (including attorneys'
fees) if such person is determined (in he manner prescribed in Section 10.4
hereof) to have acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interest of the Corporation.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable
ITEM 8. EXHIBITS
Number Description
------ -----------
4A General Nutrition Companies, Inc. 1996 Management
and Director Stock Purchase Plan
4B General Nutrition Companies, Inc. 1996 Management
and Director Stock Option Plan
4C Stock Option Agreement
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5 Opinion of James M. Sander, Esquire, Vice
President-Law, Chief Legal Officer and Secretary, as
to legality of shares being registered and consent
15 Letter from Deloitte & Touche LLP regarding
unaudited interim financial information
23 Consent of Deloitte & Touche LLP
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes the following:
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
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(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes, that, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such labilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person for the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pittsburgh, State of Pennsylvania, on
February 7, 1997.
GENERAL NUTRITION COMPANIES, INC.
By: /s/ WILLIAM E. WATTS
----------------------------
William E. Watts
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ JERRY D. HORN Chairman of the Board and Director February 7, 1997
- --------------------------
Jerry D. Horn
/s/ WILLIAM E. WATTS President, Chief Executive Officer and Director February 7, 1997
- --------------------------
William E. Watts
/s/ EDWIN J. KOZLOWSKI Executive Vice President, Chief Financial February 7, 1997
- -------------------------- Officer, and Treasurer (Principal Financial and
Edwin J. Kozlowski Accounting Officer)
/s/ THOMAS R. SHEPHERD Director February 7, 1997
- --------------------------
Thomas R. Shepherd
/s/ W. HARRISON WELLFORD Director February 7, 1997
- --------------------------
W. Harrison Wellford
/s/ RONALD L. ROSSETTI Director February 7, 1997
- --------------------------
Ronald L. Rossetti
/s/ DAVID LUCAS Director February 7, 1997
- --------------------------
David Lucas
</TABLE>
9
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EXHIBIT INDEX
Sequential
Page
Number Description Number
------ ----------- ------
4A General Nutrition Companies, Inc. 1996 Management
and Director Stock Purchase Plan.
4B General Nutrition Companies, Inc. 1996 Management
and Director Stock Option Plan.
4C Stock Option Agreement
5 Opinion of James M. Sander, Esquire, Vice President-Law,
Chief Legal Officer and Secretary, as to legality of shares
being registered and consent.
15 Letter from Deloitte & Touche LLP Regarding Unaudited
Interim Financial Information
23 Consents of Experts - included in Registration Statement
under heading "Independent Auditors' Consent."
<PAGE> 1
Exhibit 4.A
GENERAL NUTRITION COMPANIES, INC.
1996 MANAGEMENT AND DIRECTOR STOCK PURCHASE PLAN
1. Purpose
The purposes of the plan are to encourage senior management of General
Nutrition Companies, Inc. (the "Company") and its affiliates and directors of
the Company to own shares of the Company's stock and thereby to align their
interests more closely with the interests of the other shareholders of the
Company, to encourage the highest level of senior management and director
performance, and to provide a financial incentive that will help attract and
retain the most qualified senior management and directors.
2. Definitions
The following words or terms, when used herein, shall have the
following respective meanings:
(a) "Account" means the Management and Director Stock Purchase
Account established for a Participant under Section 7
hereunder.
(b) "Base Market Price" shall mean the average stock price used
for establishing the quarterly Purchase Price and determined
by calculating the average of the high and low sales prices
of the common stock for the first five trading days of each
of the three months of the previous calendar quarter. If the
shares of Common Stock are listed on any national securities
exchange, or traded on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") National Market
System, the Base Market Price shall be calculated using the
largest such exchange, or if not traded on an exchange, the
NASDAQ National Market System. If the
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shares of Common Stock are not then listed on any such
exchange or the NASDAQ National Market System, the Base
Market Price per share of Common Stock shall be calculated
using the mean between the closing "Bid" and the closing
"Asked" prices, if any, as reported in the National Daily
Quotation Service for such day. If the Base Market Price
cannot be determined under the preceding sentences, it shall
be determined in good faith by the Board of Directors.
(c) "Basic Compensation" shall mean the regular rate of salary or
wages in effect immediately prior to a Purchase Period, but
shall exclude bonuses, severance or payments of a similar
kind, contributions by the applicable employer to benefit
plans and benefits paid under such plans, and amounts paid in
reimbursement for employee business expenses. For
non-employee directors Base Compensation shall mean their
annual director fees and meeting attendance fees.
(d) "Board of Directors" shall mean the Board of Directors of
General Nutrition Companies, Inc.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Committee" shall mean the Compensation Committee of the
Board of Directors.
(g) "Company" shall mean General Nutrition Companies, Inc., a
Delaware Corporation.
(h) "Common Stock" shall mean shares of the Company's common
stock with a par value of $.01 per share.
(i) "Effective Date" shall mean August 22, 1996 (the date upon
which the Plan was adopted by the Board of Directors of the
Company).
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(j) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business
day.
(k) "Participant shall mean a director of the Company or an
Employee who is selected by the Committee to receive benefits
under the Plan and who has elected to participate in the Plan
under Section 6 hereunder.
(l) "Plan" shall mean the 1996 Management and Director Stock
Purchase Plan.
(m) "Purchase Loan" means an extension of credit to the
Participant by the Company evidenced by the Purchase Note and
secured by a pledge of the shares of Common Stock purchased
by the Participant.
(n) "Purchase Note" means a promissory note including the terms
set forth in Section 8.
(o) "Purchase Price" shall mean 80% of the Base Market Price for
the relevant Purchase Period multiplied by the number of
shares purchased.
(p) Except as provided below, there shall be four quarterly
"Purchase Periods" in each full fiscal year during which the
Plan is in effect. Such Purchase Period shall commence on the
1st business day of each fiscal quarter and end on the 5th
business day of each fiscal quarter. For example, the first
Purchase Period after adoption of the Plan shall commence on
October 14, 1996, and end on October 18, 1996.
3. Grant of Option to Purchase Shares.
Each Participant shall be granted an option effective on the first day
of each Purchase Period to Purchase shares of Common Stock. The term of the
option shall be the length of the Purchase Period.
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4. Shares.
There shall be 1,000,000 shares of Common Stock reserved for issuance
to and purchase by Participants under the Plan, subject to adjustment as herein
provided. The shares of Common Stock subject to the Plan shall be either shares
of authorized but unissued Common Stock or shares of Common Stock acquired by
the Company and held as treasury shares. Shares of Common Stock not purchased
under an option terminated pursuant to the provisions of the Plan may again be
subject to options granted under the Plan.
5. Administration.
The Plan shall be administered by the Board of Directors or by a
committee (the "Committee") consisting of two or more members of the Company's
Board of Directors, to whom the Board may (except as provided in Section 5
hereof) delegate its authority hereunder. The decision of the Board or of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Board or the
Committee shall have the authority to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan. The Board or the Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any option agreement granted
hereunder in the manner and to the extent it shall deem expedient to carry the
Plan into effect and shall be the sole and final judge of such expediency. No
Board or Committee member shall be liable for any action or determination made
in good faith.
If any such Committee is appointed, the Board may from time to time
appoint a member or members of the Committee in substantiation for or in
addition to the member or members then in office and may fill vacancies on the
Committee however caused. The Committee shall choose one of its members as
Chairman and shall hold meetings at such times and places as it shall deem
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advisable. A majority of the members of the Committee shall constitute a quorum
and any action may be taken by a majority of those present and voting at any
meeting. Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee.
6. Election to Participate.
(a) Election Process. A Participant may elect to become a Participant
in the Plan for a Purchase Period by completing and filing with James M.
Sander, the Corporate Secretary, a "Stock Purchase Plan Enrollment" form prior
to the first day of the Purchase Period for which the election is made. Such
Stock Purchase Plan Enrollment form shall be in such form as shall be
determined by the Board of Directors or the Committee. The election to
participate shall be effective for the Purchase Period for which it is made.
There is no limit on the number of Purchase Periods for which a Participant may
elect in the Plan, however, the aggregate purchases under the Plan by a
Participant may not exceed two times his/her then current Base Compensation;
provided however that non-officer (below Vice Presidents) and non-directors may
participate only to fifty percent (50%) of their Base Compensation. Options
granted to Participants who have failed to execute a Stock Purchase Plan
Enrollment form or pay the Purchase Price within the time periods prescribed by
the Plan will automatically lapse.
(b) Minimum Stockholding Requirement. The Compensation Committee of
the Board of Directors established a minimum stockholding requirement for
members of senior management with the initial guideline set by the Committee of
one times annual salary, which initial guideline would be in effect for at
least two years and thereafter reviewed by the Committee every two years
thereafter. To participate in this Plan a Participant agrees that to the extent
that the Participant has not met the minimum stockholding requirements set
forth by the Committee, then incentive
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compensation otherwise paid to the employee in cash will be paid instead 50% in
cash and 50% in Common Stock until the minimum stockholding requirement is met.
The portion of the individual incentive compensation that is paid in stock will
be reduced to meet the tax withholding obligations pursuant to the applicable
standard tax withholding rate, and the net amount will be converted into an
election to purchase shares of Common Stock under the Plan. A Stock Purchase
Plan Enrollment form will be submitted for the next Purchase Date and the
purchase on the next Exercise Date. This automatic election shall be repeated
for subsequent payments of incentive compensation until the minimum
stockholding requirement is met.
7. Employee Stock Purchase Account and Payment for Shares.
(a) An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes. Prior to the applicable
Exercise Date a Participant who has filed a completed Stock Purchase Plan
Enrollment form must pay to the Company in cash or immediately available funds
the full amount of the Purchase Price multiplied by the applicable number of
shares, together with the applicable withholding taxes amount. Payment of up to
one half of the Purchase Price and withholding tax may be made by delivery of
an approved Purchase Note; provided however, the aggregate amount loaned to the
Participant under this Plan may not exceed at any time one times the
Participant's Base Compensation. However, prior to the purchase of shares in
accordance with Section 9 or withdrawal from or termination of the Plan in
accordance with the provisions hereof, the Company may use for any valid
corporate purpose all amounts deposited under the Plan and credited for
bookkeeping purposes to his Account.
(b) The Company shall be under no obligation to pay interest on funds
credited to a Participant's Account, whether upon purchase of shares in
accordance with Section 9 or upon distribution in the event of withdrawal from
or termination of the Plan as herein provided.
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8. Purchase Loan.
(a) The Company shall extend a Purchase Loan to a Participant upon the
Exercise Date to match actual cash paid into the Participant's Account for the
applicable Purchase Period and subject to the terms and conditions set forth in
this Section 8. The original principal amount of the Purchase Loan shall be up
to fifty percent (50%) of the Purchase Price of shares purchased on the
Exercise Date plus the standard withholding tax amount, if the Participant
requests such additional loan amount. However, the aggregate amount of the
Purchase Loan outstanding is limited to and may not in any event exceed one
times the Participant's then current Base Compensation. Such Purchase Loan
shall be evidenced by the Purchase Note. The obligations of each Participant
under a Purchase Note shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by any change in the existence, structure or ownership of the Company,
or any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Company or its assets or the market value of the Common Stock or
any resulting release or discharge of any obligation of the Company or the
existence of any claim, set-off or other rights which any participant may have
at any time against the Company or any other person, whether in connection with
the Plan or with any unrelated transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or counterclaim.
Notwithstanding anything to the contrary in this Section 8, the Company shall
not be required to make any Purchase Loan to a Participant if the making of
such Purchase Loan will (i) cause the Company to violate any covenant or
similar provision in any indenture, loan agreement or other agreement, or (ii)
violate any applicable federal, state or local law, provided, that the failure
to make such Purchase Loan shall be deemed to revoke the exercise of the
related Purchase Award unless otherwise specified by the Participant.
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(b) Security. Payment of the Purchase Note shall be secured by a
pledge of all of the shares of Common Stock acquired by the Participant upon
the Exercise Date to which the Purchase Loan relates. The Participant shall
effect such pledge by delivering to the Company (i) the certificate or
certificates for the shares of Common Stock acquired, accompanied by a duly
executed stock power in blank, (ii) a properly executed stock pledge agreement,
and (iii) such other documents as may be required by the Committee. A
Participant shall always have the right to sell shares of Common Stock acquired
pursuant to the Plan provided that (i) such sales must be made in open-market
transactions or at a price not less than the Market Price on the Trading Day
prior to the date of sale, (ii) the Company shall have a security interest in
the proceeds of such sale to the extent of any outstanding Purchase Loan, and
(iii) the proceeds of any such sale are utilized in the manner to satisfy any
of the applicable prepayment Sections. Prior to payment in full of the
outstanding balance on the Purchase Note (including accrued and unpaid
interest), no shares of Common Stock pledged to the Company under the stock
pledge agreement shall be released except as made available under Section 10 or
as are made available upon satisfaction of a prepayment requirement.
(c) Term. The term of the Purchase Loan for any Participant shall
begin on such Participant's Purchase Date and, subject to prepayment as
provided in subsections (e) and (g), have a final maturity date four (4) years
from the date of the Purchase Loan.
(d) Interest on the principal balance of the Purchase Loan will accrue
annually, in arrears, at six percent (6%). Accrued interest shall be payable on
a quarterly basis.
(e) Forgiveness of Company Loan. The Company would forgive the
principal of the loan at the rate of 25% per year, pursuant to the schedule set
forth below, if the Company's stock price appreciates by 25% or more in the
years following the purchase. Achievement of the hurdle will be
8
<PAGE> 9
calculated based upon the stock's 15 day trailing trading average stock price
during such year. (If the stock price did not appreciate by the 25% minimum in
any one year, the Participant would get the benefit of a catch up if the stock
price appreciated in the following year to the level required in such following
year or on a cumulative basis over the course of the four-year period, however,
reaching the hurdle, prior to the scheduled year does not accelerate the loan
being forgiven.) For purposes of calculating the yearly period, the twelve month
period following the Exercise Date for the applicable Purchase Period shall be
used. The amount forgiven shall include accrued interest for the applicable
quarter. The schedule for Loan Forgiveness is set forth below:
SCHEDULE FOR LOAN FORGIVENESS
<TABLE>
<CAPTION>
TARGET
YEAR STOCK PRICE LOAN BALANCE FORGIVEN
---- ----------- ---------------------
<S> <C> <C>
1 $19.50 25%
2 $24.375 25%
3 $30.468 25%
4 $38.085 25%
</TABLE>
(f) Change of Control. Upon a Change of Control prior to any
outstanding balance (including accrued and unpaid interest) of the
Participant's Purchase Loan (subject to any prepayments pursuant to Section 8)
shall be forgiven.
(g) Optional Prepayments. The Participant may prepay all or any
portion of the Purchase Loan at any time.
(h) Application of Prepayments. All prepayments made to the Company
pursuant to this Section 8 shall first be applied to pay accrued interest on
the Purchase Loan and then to reduce the principal balance due on the Purchase
Loan. Any prepayment of the remaining balance of the Purchase Loan shall be
applied to the principal payments due thereon in chronological order of
maturity.
9
<PAGE> 10
(i) Prepayment Obligations upon Termination of Service. Upon a
termination of service by a Participant ("Termination of Service") from the
Company or any of its affiliates, any outstanding balance on the Purchase Loan
(including any accrued and unpaid interest) shall become due and payable on the
later of (i) the 120th day following such Termination of Service or (ii) the
90th day following the first date on which the participant may sell the Common
Stock purchased under the Plan without incurring liability under the federal
securities laws, including Section 16 of the 1934 Act, (limited, in the case of
Section 16, to liability relating to purchases or sales of Common Stock or any
derivative security occurring prior to the Termination of Service).
(j) Prepayment Obligations Other than Termination of Service. In the
event a Participant sells shares of Common Stock acquired under the Plan prior
to the earliest of (i) Termination of Service, (ii) a Change of Control or
(iii) Loan Forgiveness, the Participant shall immediately prepay the Purchase
Loan by the full pre-tax amount of the proceeds of such sale of such shares to
the extent the current market value of the balance of shares held in the
Participants Account is less than one times the Participant's then current
Basic Compensation plus the aggregate Purchase Loan Amount. A transfer of a
Participant's shares of Common Stock to a revocable trust as to which the
Participant retains voting and investment power (which powers of revocation,
voting and investment may be shared with the Participant's spouse) or a
transfer to joint ownership with such Participant's spouse shall not be deemed
a sale for purposes of this Section 8, although such shares shall remain
pledged to secure the Purchase Loan and, solely for the purposes of this Plan,
shall be deemed to be owned by the Participant.
10
<PAGE> 11
9. Purchase of Shares.
Each Participant in the Plan automatically and without any act on his
part will be deemed to have exercised his option on each Exercise Date to the
extent that the balance then in his Account under the Plan is sufficient to
purchase at the Purchase Price whole shares of the Common Stock subject to his
option. Any balance remaining in the Participant's Account shall be carried
forward and credited for use in the next Purchase Period. If the Employee
chooses not to participate in the next Purchase Period, any balance will be
refunded to him in cash. The Company shall have the right to withhold from the
Participant's regular wages any and all withholding taxes required to be
withheld with respect to any income recognized by the Participant upon the
purchase of shares hereunder, or at the Company's option, require that the
Participant make payment to the Company of an amount necessary to meet such
withholding tax obligations.
10. Sales of Stock.
Sales of stock purchased under the Plan are permitted only when the
current market value for the Company's Common Stock held in the Participant's
account exceeds the minimum holding requirement in Section 6 plus any amount
outstanding under a Purchase Loan. The limitation in the previous sentence shall
not apply in the event the Employee has a Termination of Service with his/her
applicable company or in the event a Hardship Withdrawal is granted by the
Committee. The Employee cannot sell any amount of stock which would bring their
cumulative holdings to less than one year's salary plus the amount of purchase
loan outstanding, unless the employee left the Company or the Committee of the
Board of Director's approved a specific "hardship" withdrawal.
11
<PAGE> 12
11. Withdrawal.
A Participant who has elected to purchase shares of Common Stock may
cancel his election by written notice of cancellation delivered to the
Corporate Secretary's office ("Cancellation"), but any such notice of
Cancellation must be so delivered not later than one (1) business day before
the relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after
delivery of the Notice of Cancellation, the amount of cash credited to his
Account during the Purchase Period. Any Participant who so withdrawals from the
Plan may again become a Participant on subsequent Purchase Dates.
Upon dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving entity every option
outstanding hereunder shall terminate, in which event each Participant shall be
refunded the amount of the cash then in his Account.
12. Hardship Withdrawal.
In the event the Participant suffers a financial hardship, the
Committee may, if it deems advisable in its sole and absolute discretion,
authorize on behalf of the Participant as a hardship withdrawal a sale of Common
Stock from a Participant's Account below the minimum stockholding requirement
(the "Hardship Withdrawal"), in any portion of the Participant's Account up to,
but not in excess of, the amount needed to cover the hardship, and shares
sufficient to cover the outstanding balance on any Purchase Loan must remain in
the Participant's Account. Financial Hardship shall mean dire financial need of
the Participant caused by temporary or permanent disability or incapacity,
medical expenses, educational expenses, for the Participant or his or her
dependents, purchase of a principal residence, prevention of eviction from the
Participant's principal residence, or a material reduction in family income for
which no other resources are reasonably available.
12
<PAGE> 13
13. Issuance of Stock and Sales of Stock.
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on
the Exercise Date. Prior to that date none of the rights or privileges of a
stockholder of the Company, including the right to vote or receive dividends,
shall exist with respect to such shares.
Within a reasonable time after the Exercise Date, the Company shall
issue and allocate to the account of the Participant the number of shares of
Common Stock purchased by a Participant for the Purchase Period in book entry
form (uncertificated shares), together with a statement setting forth the
number of shares so purchased; which account shall be registered either in the
Participant's name, jointly in the names of the Participant and his spouse, or
otherwise as the participant shall designate in his Stock Purchase Plan
Enrollment form. Such designation may be changed at any time by filing notice
thereof with the Corporate Secretary.
At any time shares held in a Participant's Account becomes available
for sale by the Participant under the terms of this Plan, a Participant may
request a withdrawal of all or a portion of the shares then available for sale
and, standing in the Participant's name under the Plan. The request must be
made by written notice to the Corporate Secretary or as may be required by the
Committee. The minimum partial withdrawal is 10 shares of Common Stock.
Provided, however, that Hardship Withdrawals approved by the Compensation
Committee may be permitted.
14. Recapitalizations, Reorganizations and the Like.
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason
of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends payable
in
13
<PAGE> 14
capital stock, appropriate adjustment shall be made in the number and kind of
shares as to which options may be granted under the Plan and as to which
outstanding options or portions thereof then unexercised shall be exercisable,
to the end that the proportionate interest of the optionee shall be maintained
as before the occurrence of such event; such adjustment in outstanding options
shall be made without change in the total price applicable to the unexercised
portion of such options and with a corresponding adjustment in the option price
per share.
(b) In addition, unless otherwise determined by the Board or the
Committee in its sole discretion, in the case of any (i) sale or conveyance to
another entity of all or substantially all of the property and assets of the
Company or (ii) a Change in Control (as hereinafter defined) of the Company,
the purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the stockholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board or the Committee may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had the
option been exercised (to the extent then exercisable) and no disposition of
the shares acquired upon such exercise been made prior to such sale, conveyance
or Change in Control, less the option price therefor. Upon receipt of such
consideration by the optionee, his or her option shall immediately terminate
and be of no further force and effect. The value of the stock or other
securities the optionee would have received if the option had been exercised
shall be determined in good faith by the Board or the Committee of the Company.
A "Change in Control" shall be deemed to have occurred if any person, or any
two or more persons acting as a group, and all affiliates of such person or
persons, shall acquire shares of the Company's then outstanding Common Stock of
the Company, in one or more transactions, or series of transactions, such that
14
<PAGE> 15
following such transaction or transactions, such person or group and affiliates
beneficially own twenty (20%) percent or more of the Company's Common Stock
outstanding.
(c) Upon dissolution or liquidation of the Company, all options
granted under this Plan shall terminate, but each optionee (if at such time in
the employ of or a director of the Company of any of its subsidiaries) shall
have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
(d) If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board or the
Committee shall authorize the issuance or assumption of a stock option or stock
options in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Committee may grant an
option or options upon such terms and conditions as it may deem appropriate for
the purpose of assumption of the old option, or substitution of a new option
for the old option, in conformity with the provisions of such Section 424(a) of
the Code and the Regulations thereunder, and any such option shall not reduce
the number of shares otherwise available for issuance under the Plan.
15. Termination of Employment.
(a) Upon a Participant's termination of employment for any reason,
other than death, the entire balance credited to his Account shall be
automatically refunded and any shares in excess of the aggregate Purchase Loan
balance shall be released to the Participant.
(b) Upon the death of a Participant, the entire balance in the
deceased Participant's Account shall be paid in cash to the Participant's
designated beneficiary, if any, under a group insurance plan of the Company
covering such employee, or otherwise to his estate and any shares in excess of
the loan balance released, as well.
15
<PAGE> 16
16. No Guarantee of Continued Employment.
Granting of an option under this Plan shall imply no right of
continued employment with the Company for any Participant.
17. Notice.
Any notice which a Participant files pursuant to this Plan shall be in
writing and shall be delivered personally or by mail addressed to General
Nutrition Companies, Inc., 921 Penn Avenue, Pittsburgh, Pennsylvania 15222,
Attention James Sander, Corporate Secretary. Any notice to a Participant shall
be conspicuously posted in the Company's principal office or shall be mailed
addressed to the Participant at the address designated in the Stock Purchase
Plan Enrollment Form or in a subsequent writing.
18. Government Approvals or Consents.
This Plan and any offering and sales to Participants under it are
subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section 19,
the Board of Directors for the Company may make such changes in the Plan and
include such terms in any offering under this Plan as may be necessary or
desirable, in the opinion of counsel, to comply with the rules or regulations
of any governmental authority, or to be eligible for tax benefits under the
Code or the laws of any state.
16
<PAGE> 17
19. Amendment of the Plan
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that no such action shall adversely affect
options theretofore granted hereunder, and provided that no such action by the
Board of Directors without approval of the Company's stockholders may: increase
the total number of shares of Common Stock which may be purchased by all
Participants.
For purposes of this Section 19, termination of the Plan by the Board
of Directors pursuant to Section 19 shall not be deemed to be an action which
adversely affects options theretofore granted hereunder.
20. Term of the Plan
The Plan shall become effective on the Effective Date, provided that
it is approved within twelve months after adoption by the Board of Directors at
a duly-held stockholder's meeting by stockholders of the Company holding a
majority of the Company's voting stock. The Plan shall continue in effect
through August 22, 2006, provided, however, that the Board of Directors shall
have the right to terminate the Plan at any time. In the event of the
expiration of the Plan or its termination, all options then outstanding under
the Plan shall automatically be canceled and the entire amount credited to the
Account of each Participant hereunder shall be refunded to each such
Participant.
17
<PAGE> 1
Exhibit 4.B
1996 MANAGEMENT AND DIRECTOR
STOCK OPTION PLAN
GENERAL NUTRITION COMPANIES, INC.
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of General Nutrition Companies, Inc. (the "Company") by officers
and key employees of the Company and its subsidiaries, and directors of the
Company, to induce qualified personnel to enter and remain in the employ of the
Company or its subsidiaries and otherwise to provide additional incentive for
optionees to promote the success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or
Treasury shares of the common stock, $.01 par value, of the Company ("Common
Stock") for which options may be granted under the Plan shall not exceed Five
Million (5,000,000) shares, subject to adjustment as provided in Section 12
hereof.
(b) Of the total number of shares for which options may be granted
under the Plan, 2,500,000 shares are initially available for grant hereunder
and 2,500,000 will become available for grant hereunder if the market price per
share of the Company's Common Stock reaches the following levels on or prior to
August 22, 2000:
<TABLE>
<CAPTION>
Market Price Additional Share Becoming
Per Share Available for Grant
------------ -------------------------
<S> <C>
$18.60 625,000
$22.32 625,000
$26.78 625,000
$32.14 625,000
---------
TOTAL: 2,500,000
</TABLE>
<PAGE> 2
(c) If an option granted or assumed hereunder shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for subsequent option grants
under the Plan.
(d) Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
3. Administration of the Plan.
The Plan shall be administered by the Board of Directors or by a
committee (the "Committee") consisting of two or more members of the Company's
Board of Directors, to whom the Board may (except as provided in Section 5
hereof) delegate its authority hereunder. The decision of the Board or of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Board or the
Committee shall have the authority to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan. The Board or the Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any option agreement granted
hereunder in the manner and to the extent it shall deem expedient to carry the
Plan into effect and shall be the sole and final judge of such expediency. No
Board or Committee member shall be liable for any action or determination made
in good faith.
If any such Committee is appointed, the Board may from time to time
appoint a member or members of the Committee in substantiation for or in
addition to the member or members then in office and may fill vacancies on the
Committee however caused. The Committee shall choose one of its members as
Chairman and shall hold meetings at such times and places as it shall deem
2
<PAGE> 3
advisable. A majority of the members of the Committee shall constitute a quorum
and any action may be taken by a majority of those present and voting at any
meeting. Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee.
4. Type of Options.
Options granted pursuant to the Plan shall be authorized by action of
the Board or the Committee and may be designated in the sole discretion of the
Board or the Committee as either incentive stock options meeting the
requirements of Section 422 of the Code or non-qualified options which are not
intended to meet the requirements of Section 422 of the Code. Options
designated as incentive stock options that fail to continue to meet the
requirements of Section 422 of the Code shall be redesignated as non-qualified
options automatically without further action by the Board or the Committee on
the date of such failure to continue to meet the requirements of Section 422 of
the Code.
5. Eligibility.
Options designated as incentive stock options may be granted only to
officers and key employees of the Company or of any subsidiary corporation
(herein called "subsidiary" or "subsidiaries"), as defined in Section 424 of
the Code and the Treasury Regulations promulgated thereunder (the
"Regulations"). Options designated as non-qualified options may be granted to
directors of the Company and officers and key employees of the Company or of
any of its subsidiaries.
Option grants to directors who are not otherwise employees of the
Company or a subsidiary shall be made by the Board of Directors.
3
<PAGE> 4
In determining the eligibility of an individual to be granted an
option, as well as in determining the number of shares to be optioned to any
individual, the Committee shall take into account the position and
responsibilities of the individual being considered, the nature and value to
the Company or its subsidiaries of his or her service and accomplishments, his
or her present and potential contribution to the success of the Company or its
subsidiaries, and such other factors as the Committee may deem relevant.
No option designated as an incentive stock option shall be granted to
any optionee of the Company or any subsidiary if such optionee owns,
immediately prior to the grant of an option, stock representing more than 10%
of the voting power or more than 10% of the value of all classes of stock of
the Company or a parent or a subsidiary, unless the purchase price for the
stock under such option shall be at least 110% of its fair market value at the
time such option is granted and the option, by its terms, shall not be
exercisable more than five years from the date it is granted. In determining
the stock ownership under this paragraph, the provisions of Section 424(d) of
the Code shall be controlling. In determining the fair market value under this
paragraph, the provisions of Section 7 hereof shall apply. The maximum number
of shares of Common Stock with respect to which an option or options may be
granted to any optionee in any one taxable year of the Company shall not exceed
500,000 shares of Common Stock, taking into account shares which were the
subject of options granted during such taxable year and subsequently
terminated.
6. Option Grants; Option Agreement.
Of the 2,500,000 shares initially available for the grant of options
hereunder, 1,250,000 shall be available for grant at exercise prices determined
by the Board or the Committee, which prices shall not be less than the fair
market value of the Company's Common Stock at the time of grant. Such options
shall vest on a daily basis over the four years commencing on the date of
grant.
4
<PAGE> 5
The remaining 1,250,000 shares initially available for grant hereunder
shall be granted at exercise prices determined by the Board or the Committee,
which prices shall not be less than the fair market value of the Company's
Common Stock at the time of grant. Such options shall vest at the rate of 25%
per year over the four year period commencing on the date of grant, provided
that the market price per share of the Company's Common Stock achieves
specified levels of appreciation during such four year period. Such
appreciation must equal or exceed 20% in each year commencing with the date of
grant of each option. Notwithstanding any such appreciation, except as set
forth in the following sentence, no more than 25% of the shares available for
issuance under such option shall vest in any one year. If in a given year the
market price per share of the Company's Common Stock fails to achieve the
specified level, the shares which fail to vest in that year may vest in a
subsequent year within such four year period commencing on the date of grant,
assuming that the market price per share of the Company's Common Stock achieves
in such subsequent year the level which was not met in a previous year.
Options with respect to the additional 2,500,000 shares which may
become available for grant hereunder pursuant to Section 2(b) hereof shall be
granted at exercise prices equal to the price per share which was required in
order to make such shares available for grant under such Section 2(b). Options
for the purchase of 50% of the shares which become available for amount for
grant pursuant to Section 2(b) hereof shall vest on a daily basis over the four
year period commencing on the date of grant. Options for the purchase of the
remaining 50% of such shares shall vest at the rate of 25% per year over the
four year period commencing on the date of grant if the market price per share
of the Company's Common Stock appreciates at the rate of 20% or more in each
year of such four year period. In the event that the required level of stock
appreciation is not met in a given year,
5
<PAGE> 6
the shares which fail to vest in that year may vest in a subsequent year if the
level of stock appreciation which was not met is achieved in a subsequent year
within such four year period.
Notwithstanding the foregoing, if an option whose vesting is dependent
upon the achievement of specified levels of stock price appreciation has not
been fully vested by the close of the four year period commencing on the date
of grant, such option shall be exercisable for a 30-day period commencing with
the close of such four year period and thereafter shall terminate to the extent
not exercised.
Each option shall be evidenced by an option agreement (the
"Agreement") duly executed on behalf of the Company and by the optionee to whom
such option is granted, which Agreement shall comply with and be subject to the
terms and conditions of the Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Committee, provided that options designated as incentive
stock options shall meet all of the conditions for incentive stock options as
defined in Section 422 of the Code. No option shall be granted within the
meaning of the Plan and no purported grant of any option shall be effective
until the Agreement shall have been duly executed on behalf of the Company and
the optionee. More than one option may be granted to an individual.
7. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be as determined by the
Board or the Committee, but, except as provided in Section 6 above, in no event
less than the fair market value of such Common Stock at the time the option is
granted. The option price or prices of shares of the Company's Common Stock for
incentive stock options shall be the fair market value of such Common Stock at
the time
6
<PAGE> 7
the option is granted as determined by the Board or the Committee in accordance
with the Regulations promulgated under Section 422 of the Code.
If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on the largest such exchange on the business day immediately preceding
the date of the grant of the option or, if none, shall be determined by taking
a weighted average of the means between the highest and lowest sales prices on
the nearest date before and the nearest date after the date of grant in
accordance with Treasury Regulations Section 25.2512-2. If the shares are not
then listed on any such exchange, the fair market value of such shares shall be
the mean between the high and low sales prices, if any, as reported in the
National Association of Securities Dealers Automated Quotation System National
Market System ("NASDAQ/NMS") for the business day immediately preceding the
date of the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales on the
nearest date before and the nearest date after the date of grant in accordance
with Treasury Regulations Section 25.2512-2. If the shares are not then either
listed on any such exchange or quoted in NASDAQ/NMS, the fair market value
shall be the mean between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation Service for the
business day immediately preceding the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the Board or the
Committee.
7
<PAGE> 8
8. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares
of Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price. Delivery of shares of Common Stock of
the Company owned by such optionee may be made only if such payment does not
result in a charge to earnings for financial accounting purposes as determined
by the Board or the Committee. The fair market value of any shares of the
Company's Common Stock which may be delivered upon exercise of an option shall
be determined by the Board or the Committee in accordance with Section 7
hereof.
(b) To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or
in part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares
with respect to which the option is being exercised, accompanied by payment in
full for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at
the principal office of the Company to the person or persons exercising the
option at such time, during ordinary business hours, after five (5) but not
more than thirty (30) days from the date of receipt of the notice by the
Company, as shall be designated in such notice, or at such time, place and
manner as may be agreed upon by the Company and the person or persons
exercising the option.
8
<PAGE> 9
9. Exercise of Options.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no option
granted under the Plan shall have a term in excess of ten (10) years from the
date of grant.
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall
be carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less
than ten (10) full shares of Common Stock.
10. Term of Options; Exercisability.
(a) Term.
(1) Each option shall expire not more than ten (10) years
from the date of the granting thereof, but shall be subject to earlier
termination as herein provided.
(2) Except as otherwise provided in this Section 10, an
option granted to any employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall terminate on (i) the later of the last
day of the third month after the date such optionee ceases to be a director or
an employee of the Company or one of its subsidiaries or the third business day
after the Plan is approved by the Stockholders under Section 19 hereof or (ii)
on the date on which the option expires by its terms, whichever occurs first.
(3) If such termination of employment is as a result of
termination for cause such option will terminate on the date the optionee
ceases to be an employee of the Company or one of its subsidiaries.
9
<PAGE> 10
(4) If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), such option shall terminate on the last day of the twelfth month from
the date such optionee ceases to be an employee, or on the date on which the
option expires by its terms, whichever occurs first.
(5) An option granted to a director shall terminate on the
last day of the third month after such director ceases to serve as a director.
(6) In the event of the death of any optionee (whether
employee or director), any option granted to such optionee shall terminate on
the last day of the twelfth month from the date of death, or on the date on
which the option expires by its terms, whichever occurs first.
(b) Exercisability.
An option granted to a director or an employee optionee who
ceases to be a director or an employee of the Company or one of its
subsidiaries shall be exercisable only to the extent that the right to purchase
shares under such option has accrued and is in effect on the date such optionee
ceases to be a director or an employee of the Company or one of its
subsidiaries, provided however that an option granted to a director who does
not stand for reelection to the Board of Directors upon the expiration of such
director's term of office shall be exercisable as to the full amount of the
shares covered by such option, notwithstanding the provisions of such option
concerning vesting.
11. Options Not Transferrable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferrable by such optionee otherwise than by
will or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him or her. Any option
granted under the Plan shall be null and void and without effect upon the
bankruptcy of the
10
<PAGE> 11
optionee to whom the option is granted, or upon any attempted assignment or
transfer, except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, trustee process or similar process, whether
legal or equitable, upon such option. Notwithstanding the foregoing, any option
granted under the Plan (other than an incentive stock option) may provide (if
the Board or the Committee in its sole discretion decides to include such a
provision), that the optionee shall be entitled to make a transfer of all or
any part of such option to members of his immediate family or a trust for the
benefit of such persons, following notice to the Secretary of the Company and
approval by the Board or the Committee in its sole discretion, provided that
(in the case of options granted to persons subject to Section 16 of the
Securities Exchange Act of 1934 at the time of grant), any such provision shall
by its terms be inoperative and no such transfer shall be permitted except when
transfers to members of the optionee's immediate family or a trust for the
benefit of such persons are permissible under the conditions to the
availability of the exemption afforded by Regulation 16b-3 promulgated under
the Securities Exchange Act of 1934.
12. Recapitalizations, Reorganizations and the Like.
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason
of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends payable
in capital stock, appropriate adjustment shall be made in the number and kind
of shares as to which options may be granted under the Plan and as to which
outstanding options or portions thereof then unexercised shall be exercisable,
to the end that the proportionate interest of the optionee shall be
11
<PAGE> 12
maintained as before the occurrence of such event; such adjustment in
outstanding options shall be made without change in the total price applicable
to the unexercised portion of such options and with a corresponding adjustment
in the option price per share.
(b) In addition, unless otherwise determined by the Board or the
Committee in its sole discretion, in the case of any (i) sale or conveyance to
another entity of all or substantially all of the property and assets of the
Company or (ii) a Change in Control (as hereinafter defined) of the Company,
the purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the stockholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board or the Committee may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had the
option been exercised (to the extent then exercisable) and no disposition of
the shares acquired upon such exercise been made prior to such sale, conveyance
or Change in Control, less the option price therefor. Upon receipt of such
consideration by the optionee, his or her option shall immediately terminate
and be of no further force and effect. The value of the stock or other
securities the optionee would have received if the option had been exercised
shall be determined in good faith by the Board or the Committee of the Company,
and in the case of shares of the Common Stock of the Company, in accordance
with the provisions of Section 7 hereof. The Board or the Committee shall also
have the power and right to accelerate the exercisability of any options,
notwithstanding any limitations in this Plan or in the Agreement upon such a
sale, conveyance or Change in Control. Upon such acceleration, any options or
portion thereof originally designated as incentive stock options that no longer
qualify as incentive stock options under Section 422 of the Code as a result of
such acceleration shall be redesigned as non-qualified stock options.
12
<PAGE> 13
A "Change in Control" shall be deemed to have occurred if any person, or any
two or more persons acting as a group, and all affiliates of such person or
persons, shall acquire shares of the Company's then outstanding Common Stock of
the Company, in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own twenty (20%) percent or more of the Company's Common Stock
outstanding.
(c) Upon dissolution or liquidation of the Company, all options
granted under this Plan shall terminate, but each optionee (if at such time in
the employ of or a director of the Company of any of its subsidiaries) shall
have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
(d) If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board or the
Committee shall authorize the issuance or assumption of a stock option or stock
options in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Committee may grant an
option or options upon such terms and conditions as it may deem appropriate for
the purpose of assumption of the old option, or substitution of a new option
for the old option, in conformity with the provisions of such Section 424(a) of
the Code and the Regulations thereunder, and any such option shall not reduce
the number of shares otherwise available for issuance under the Plan.
(e) No fraction of a share shall be purchasable or deliverable upon
the exercise of any option, but in the event any adjustment hereunder of the
number of shares covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the nearest smaller
whole number of shares.
13
<PAGE> 14
13. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate
such employment or to increase or decrease the compensation of the option
holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Board or the Committee at the time.
14. Withholding.
The Company's obligation to deliver shares upon the exercise of any
non-qualified option granted under the Plan shall be subject to the option
holder's satisfaction of all applicable Federal, state and local income,
excise, employment and other tax withholding requirements. The Company and
employee may agree to withhold shares of Common Stock purchased upon exercise
of an option to satisfy the above-mentioned withholding requirements.
15. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 8, the Company may delay
the issuance of shares covered by the exercise of any option and the delivery
of a certificate for such shares until one of the following conditions shall be
satisfied:
(i) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or
14
<PAGE> 15
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
16. Purchase for Investment; Rights of Holder on Subsequent
Registration.
Unless the shares to be issued upon exercise of an option granted
under the Plan have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended, the Company shall be under no
obligation to issue any shares covered by any option unless the person who
exercises such option, in whole or in part, shall give a written representation
and undertaking to the Company which is satisfactory in form and scope to
counsel for the Company and upon which, in the opinion of such counsel, the
Company may reasonably rely, that he or she is acquiring the shares issued
pursuant to such exercise of the option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of
the same except in compliance with any rules and regulations in force at the
time of such transfer under the Securities Act of 1933, or any other applicable
law, and that if shares are issued without such registration, a legend to this
effect may be endorsed upon the securities so issued. In the event that the
Company shall, nevertheless, deem it necessary or
15
<PAGE> 16
desirable to register under the Securities Act of 1933 or other applicable
statutes any shares with respect to which an option shall have been exercised,
or to qualify any such shares for exemption from the Securities Act of 1933 or
other applicable statutes, then the Company may take such action and may
require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers
and directors and controlling persons from such holder against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
17. Loans.
The Company may not make loans to optionees to permit them to exercise
options.
18. Modification of Outstanding Options.
The Board or the Committee may authorize the amendment of any
outstanding option with the consent of the optionee when and subject to such
conditions as are deemed to be in the best interest of the Company and in
accordance with the purposes of this Plan.
19. Approval of Stockholders.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or by
written consent of a majority of all the stockholders, within twelve (12)
months after the adoption of the Plan by the Board of Directors and shall take
effect as of the date
16
<PAGE> 17
of adoption by the Board upon such approval. The Board or the Committee may
grant options under the Plan prior to such approval, but any such option shall
become effective as of the date of grant only upon such approval, and,
accordingly, no such option may be exercisable prior to such approval.
20. Termination and Amendment of Plan.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in Section 20, the Board of
Directors may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 19, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan or change the provisions
of Section 6 regarding criteria for vesting of options. The Board or the
Committee may grant options to persons subject to Section 16(b) of the
Securities and Exchange Act of 1934 after an amendment to the Plan by the Board
of Directors requiring stockholder approval under Section 20, but any such
option shall become effective as of the date of grant only upon such approval
and accordingly, no such option may be exercisable prior to such approval.
Termination or any modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option theretofore
granted to him or her.
21. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
17
<PAGE> 18
22. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. Notices.
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on
the records of the Company.
18
<PAGE> 1
Exhibit 4.C
RAKOWSKI
GENERAL NUTRITION COMPANIES, INC.
STOCK OPTION AGREEMENT
AND
STOCK OPTION
AGREEMENT entered into as of the 7th day of January, 1997 by and
between General Nutrition Companies, Inc., a Delaware corporation with a
principal place of business at 921 Penn Avenue, Pittsburgh, Pennsylvania 15222
(the "Company"), and Richard Rakowski (the "Optionee").
WHEREAS, the Company desires to grant the Optionee a non-qualified
stock option to acquire shares of the Company's Common Stock, $.01 par value
per share ("Common Stock") as compensation for the consulting and design
services provided to the Company and its affiliates; and
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to the
Optionee a non-qualified stock option (the "Option") subject to the terms and
conditions set forth herein, to purchase all or any part of an aggregate of
125,000 shares of Common Stock ("Shares") on the terms and conditions
hereinafter set forth.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for
the Shares covered by the Option shall be $16.875 per Share subject to
adjustment as called for herein.
3. OPTION VESTING SCHEDULE.
(a) Subject to the other terms of this option agreement
regarding exercisability of Options, eight percent (8%) of the Options to
Purchase shares shall vest and may be exercised each time the Orlando Prototype
Alive Store achieves or exceeds on a period (the Company's 28 day accounting
cycle pursuant to its fiscal year) basis a 20% operating profit (pre-tax
operating profit on a fully absorbed at the store level basis but excluding
allocation of corporate overhead costs) on at least a 30%, or whatever
percentage increase, when combined with that stores first years increase over
the previous GNC store is equal to or greater than a 50% increase in overall
same store sales for that Prototype Store over that stores 13 periods following
the first anniversary date of its store opening as an Alive Store.
(b) Subject to the other terms of this option agreement
regarding exercisability of Options, eight percent (8%) of the Options to
Purchase shares shall vest and may be exercised each time one of the Prototype
Alive Stores achieve or exceed on a period basis within the first thirteen
periods after the opening of the Prototype Store, other than the Orlando Store,
a 20% operating profit (pre-tax operating profit on a fully absorbed at the
store level basis but excluding allocation of corporate overhead costs) on at
least a 50% increase in overall same store sales for that Prototype Store. The
sales increase will be calculated by comparing the sales by period in the
Prototype to the actual sales achieved by the GNC store for the prior year if
it was a GNC store in the same mall prior to converting to the Prototype Store.
(c) Sales and profit hurdles must be achieved individually.
In determining profit increase at the Prototype locations depreciation will be
calculated based on the projected buildout cost of the Alive Store concept on a
rollout basis. If more than one Prototype Store meets the performance hurdle in
any given month during the vesting period then an additional eight percent (8%)
of the Options shall vest per each such store.
<PAGE> 2
(d) An Option shall be exercisable on or after the date that
the corporate secretary of the Company certifies in writing to the Company that
the performance hurdle has been met for the applicable month. Any exercise
shall be accompanied by a written notice to the Company specifying the number
of shares as to which the Option is being exercised.
(e) Notwithstanding the foregoing, Options will become vested
and exercisable with respect to all Shares if, prior to the expiration of the
vesting schedule period, there is (i) a sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii) a
change in control of the Company as defined in paragraph 8 below.
4. TERM OF OPTIONS;
(a) The Option shall expire not more than five (5) years from
the date of the granting thereof, but shall be subject to earlier termination
as herein provided.
5. MANNER OF EXERCISE OF OPTION AND MANNER OF PAYMENT.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in part by
giving written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. Payment shall be wholly in cash
or by certified check. Upon such exercise, delivery of a certificate for
paid-up, non-assessable Shares shall be made at the principal office of the
Company to the person exercising the Option, not more than thirty (30) days
from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common stock as
will be sufficient to satisfy the requirements of the Option. The Optionee
shall not have any of the rights of a stockholder of the Company in respect of
the Shares until one or more certificates for such Shares shall be delivered to
him or her upon the due exercise of the Option.
(c) Payment of the exercise price may be made by delivery of
(i) cash or a check payable to the order of the Company in an amount equal to
the exercise price of such options.
(d) To the extent that the right to purchase shares under an
option has accrued and is in effect, options may be exercised in full at one
time or in part from time to time, by giving written notice, signed by the
person or persons exercising the option, to the Company, stating the number of
shares with respect to which the option is being exercised, accompanied by
payment in full for such shares as provided in subparagraph (c) above. Upon
such exercise, delivery of a certificate for paid-up non-assessable shares
shall be made at the principal office of the Company to the person or persons
exercising the option at such time, during ordinary business hours, after five
(5) but not more than thirty (30) days from the date of receipt of the notice
by the Company, as shall be designated in such notice, or at such time, place
and manner as may be agreed upon by the Company and the person or persons
exercising the option.
(e) To the extent that an option to purchase shares is not
exercised by an optionee when it becomes initially exercisable, it shall not
expire but shall be carried forward and shall be exercisable, on a cumulative
basis, until the expiration of the exercise period. No partial exercise may be
made for less than ten (10) full shares of Common Stock.
<PAGE> 3
6. NON-TRANSFERABILITY. Except as provided below, the right
of the Optionee to exercise the Option shall not be assignable or transferable
by the Optionee otherwise than by will or the laws of descent and distribution,
and the Option may be exercised during the lifetime of the Optionee only by him
or her. The Option shall be null and void and without effect upon the
bankruptcy of the Optionee or upon any attempted assignment or transfer, except
as hereinabove provided, including without limitation any purported assignment,
whether voluntary or by operation of law, pledge, hypothecation or other
disposition attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
7. REPRESENTATION LETTER AND INVESTMENT LEGEND.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under the
Securities Act of 1933 (the "1933 Act"), upon any date on which the Option is
exercised in whole or in part, the person exercising the Option shall give a
written representation to the Company and the Company shall place an
"investment legend", so-called, upon any certificate for the Shares issued by
reason of such exercise.
(b) The Company shall be under no obligation to qualify
Shares or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering the
issue of Shares.
8. ADJUSTMENTS ON CHANGES IN CAPITALIZATION AND CHANGE
IN CONTROL. Adjustments on Changes in Capitalization and the like shall be
made in accordance with the following provisions.
(a) In the event that the outstanding shares of the Common
Stock of the Company are changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends payable
in capital stock, appropriate adjustment shall be made in the number and kind
of shares as to which outstanding options or portions thereof then unexercised
shall be exercisable, to the end that the proportionate interest of the
optionee shall be maintained as before the occurrence of such event; such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Board or
the Committee in its sole discretion, in the case of any (i) sale or conveyance
to another entity of all or substantially all of the property and assets of the
Company or (ii) a Change in Control (as hereinafter defined) of the Company,
the purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the stockholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board of Directors may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had the
option been exercised (to the extent then exercisable) and no disposition of
the shares acquired upon such exercise been made prior to such sale, conveyance
or Change in Control, less the option price therefor. Upon receipt of such
consideration by the optionee, his or her option shall immediately terminate
and be of no further force and effect. The value of the stock or other
securities the optionee would have received if the option had been exercised
shall be determined in good faith by the Board of Directors of the Company, and
in the case of shares of the Common Stock of the Company, in accordance with
the provisions below. If such shares are then listed on any national securities
exchange, the fair market value shall be the mean between the high and low
sales prices, if any, on the largest such exchange on the business day
immediately preceding the date of the grant of the option or, if none, shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices on the nearest date before and the nearest date after the
date of grant in
<PAGE> 4
accordance with Treasury Regulations Section 25.2512-2. If the shares are not
then listed on any such exchange, the fair market value of such shares shall be
the mean between the high and low sales prices, if any, as reported in the
National Association of Securities Dealers Automated Quotation System National
Market System ("NASDAQ/NMS") for the business day immediately preceding the
date of the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales on the
nearest date before and the nearest date after the date of grant in accordance
with Treasury Regulations Section 25.2512-2. If the shares are not then either
listed on any such exchange or quoted in NASDAQ/NMS, the fair market value
shall be the mean between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation Service for the
business day immediately preceding the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the Board or the
Committee.
(c) The Board shall also have the power and right to
accelerate the exercisability of any options, notwithstanding any limitations
in this Agreement upon such a sale, conveyance or Change in Control. A "Change
in Control" shall be deemed to have occurred if any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, shall
acquire shares of the Company's then outstanding Common Stock of the Company,
in one or more transactions, or series of transactions, such that following
such transaction or transactions, such person or group and affiliates
beneficially own twenty (20%) percent or more of the Company's Common Stock
outstanding.
(d) Upon dissolution or liquidation of the Company, all
options granted herein shall terminate, but the optionee shall have the right,
immediately prior to such dissolution or liquidation, to exercise his or her
option to the extent then exercisable.
(e) If by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation,
the Board of Directors shall authorize the issuance or assumption of a stock
option or stock options in a transaction to which Section 424(a) of the Code
applies, then, the Board or Committee may grant an option or options upon such
terms and conditions as it may deem appropriate for the purpose of assumption
of the old option, or substitution of a new option for the old option, in
conformity with the provisions of such Section 424(a) of the Code and the
Regulations thereunder.
(f) No fraction of a share shall be purchasable or
deliverable upon the exercise of any option, but in the event any adjustment
hereunder of the number of shares covered by the option shall cause such number
to include a fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares.
9. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 5, the Company
may delay the issuance of shares covered by the exercise of any option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
(i) The shares with respect to which such option
has been exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state securities acts now
in force or as hereafter amended; or
<PAGE> 5
(ii) Counsel for the Company shall have given an
opinion, which opinion shall not be unreasonably conditioned or withheld, that
such shares are exempt from registration and qualification under applicable
Federal and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about compliance
with the above conditions within a reasonable time, except that the Company
shall be under no obligation to qualify shares or to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of shares in respect of which
any option may be exercised, except as otherwise agreed to by the Company in
writing.
10. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT
REGISTRATION.
Unless the shares to be issued upon exercise of an option
have been effectively registered under the Securities Act of 1933, as now in
force or hereafter amended, the Company shall be under no obligation to issue
any shares covered by any option unless the person who exercises such option,
in whole or in part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel for the Company and
upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the shares issued pursuant to such exercise of the
option for his or her own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such shares, and that he
or she will make no transfer of the same except in compliance with any rules
and regulations in force at the time of such transfer under the Securities Act
of 1933, or any other applicable law, and that if shares are issued without
such registration, a legend to this effect may be endorsed upon the securities
so issued. In the event that the Company shall, nevertheless, deem it necessary
or desirable to register under the Securities Act of 1933 or other applicable
statutes any shares with respect to which an option shall have been exercised,
or to qualify any such shares for exemption from the Securities Act of 1933 or
other applicable statutes, then the Company may take such action and may
require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers
and directors and controlling persons from such holder against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
11. RIGHTS AS A SHAREHOLDER. The Optionee shall have no
rights as a shareholder with respect to any Shares which may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such Shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided herein, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
12. WITHHOLDING TAXES. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy all Federal,
state and local tax requirements, if any, prior to the transfer of the Shares
delivery transfer of any certificate or certificates for such Shares.
13. MODIFICATION OF OUTSTANDING OPTIONS.
The Board or the Committee may authorize the amendment of any
outstanding option with the consent of the optionee when and subject to such
conditions as are deemed to be in the best interest of the Company.
<PAGE> 6
14. NOTICES.
Any communication or notice required or permitted to be given
under the Plan shall be in writing, and mailed by registered or certified mail
or delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on
the records of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Optionee has hereunto set his or her hand
and seal, all as of the day and year first above written.
GENERAL NUTRITION COMPANIES, INC.
By:
-------------------------------
Title: President
OPTIONEE
-------------------------------
RICHARD RAKOWSKI
<PAGE> 1
Exhibit 5
February 7, 1997
General Nutrition Companies, Inc.
921 Penn Avenue
Pittsburgh, PA 15222
Gentlemen:
I am Vice President - Law, Chief Legal Officer and Secretary of
General Nutrition Companies, Inc. (the "Company") and as such counsel I am
familiar with the corporate proceedings taken in connection with the Company's
1996 Management and Director Stock Purchase plan and Management and Director
Stock Option Plan and the option granted pursuant to the Stock Option
Agreement.
As such counsel, I have examined the corporate records of the Company,
including its Restated Certificate of Incorporation, By-Laws, minutes of
meetings of its Board of Directors and Stockholders and such other documents as
I have deemed necessary as a basis for the opinion herein expressed.
Based upon the foregoing, and having regard for such legal
considerations as I deem relevant, I am of the opinion that:
1. The Company is duly organized and validity existing under the laws
of the State of Delaware.
2. The Company has authorized the issuance of 6,125,000 shares of
Common Stock with $.01 par value per share (the "Common Stock").
3. The outstanding capital stock of the Company has been duly
authorized, constitutes validly issued fully-paid and non-assessable shares of
capital stock of the Company and no personal liability attaches to any of the
shares.
4. The shares of Common Stock issuable upon the exercise of options
duly granted pursuant to the 1996 Management and Director Stock Purchase Plan,
the Management and Director Stock Option Plan, and the Stock Option Agreement
when issued in accordance with the terms thereof, will be validly issued
fully-paid, and non-assessable shares of capital stock of the Company to which
no personal liability will attach.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 and to the reference to me in the caption
"Interest of named Experts and Counsel" in the Registration Statement.
Sincerely,
James M. Sander
<PAGE> 1
Exhibit 15
DELOITTE &
TOUCHE LLP
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2500 One PPG Place Telephone: (412) 338-7200
Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380
February 6, 1997
General Nutrition Companies, Inc.
921 Penn Avenue
Pittsburgh, Pennsylvania
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of General Nutrition Companies, Inc. and subsidiaries for the
periods ended April 27, 1996 and April 29, 1995, July 20, 1996 and July 22,
1995, October 12, 1996 and October 14, 1995, as indicated in our reports dated
May 13, 1996, August 5, 1996, and November 22, 1996, respectively, because we
did not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended April 27, 1996, July 20,
1996 and October 12, 1996, are being used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
- ---------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- ---------------
<PAGE> 1
Exhibit 23
DELOITTE &
TOUCHE LLP
- --------------
2500 One PPG Place Telephone: (412) 338-7200
Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
General Nutrition Companies, Inc. on Form S-8 of our report dated March 21,
1996, incorporated by reference in the Annual Report on Form 10-K of General
Nutrition Companies, Inc. for the year ended February 3, 1996 and to the
reference to us under the heading "Interests of Named Experts and Counsel" in
this Registration Statement.
Pittsburgh, Pennsylvania
February 6, 1997
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DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
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